Posts Tagged ‘New York Times’

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The New Rules For Judging ‘Quality’ In Published Content

11 May
2010

by Ben Elowitz

This article by Ben Elowitz originally appeared as a guest post on paidContentEngaging Readers Online

Last week, I explained why the traditional ways of judging “quality” in published content are useless in the digital age. Judging by readers response to that piece, those dated values (which I labeled credential, correctness, objectivity and craftsmanship) are still sacred to many people. But here’s the problem: They simply aren’t enough to win audiences, drive financial success, or, for that matter, ensure viability. The demise of institutions like Newsweek proves that—and shows that publishers that don’t move beyond these anachronistic measures of success will perish.

So this week, I’m offering part two of my take on the changing definition of quality in published content. Here are the four new rules of quality that publishers must obey to flourish. The biggest difference between the old and new definitions of quality are who’s doing the judging. In the era of Publishing 1.0, when production costs were high, alternatives low and time ample, the editor deemed something quality or not. But today, content isn’t scarce at all—in fact, it is in oversupply. And it is the audience that judges quality directly, dozens of times per day.

So, according to the audience, what is quality?  It comes down to these four characteristics:

—Relevance. Read the rest of this entry »

People StyleWatch: Print Magazine Learns Five Lessons From Digital Media

30 Apr
2010

by Ben Elowitz

People StyleWatchDespite the significant economic pressure they are under, it’s all too rare to see a print magazine let go of tradition and embrace a new model.  So I was delighted to find that at least one Time Inc. magazine is doing just that.

Stephanie Clifford’s article about People StyleWatch in the New York Times last week shows what happens when offline executives adopt a digital mindset.  Clifford points to a number of things that Susan Kaufman, People StyleWatch’s editor, is doing well, and notes the results:  8.6% circulation growth in the second half of 2009 and 130% growth in ad pages in the first quarter, easily besting a shrinking industry.

Although I wouldn’t call it top-tier journalism (does “Find Your Perfect T-Shirt Bra!” really merit an exclamation point?), People StyleWatch replaces an elitist, artistic view of its subject with a pragmatic appreciation of what their audience likes.  It’s a habit learned online and applied offline.

Here are five lessons from online media that the publication is successfully bringing to print:

  1. The text is brief.  Photo-heavy pages with short captions work.  They make for easy scanning, moreover it’s a fashion shopping magazine; ultimately readers care more about the products than a writer’s description of them.  Ironically, although the content is brief, it is resulting in 93 minutes average engagement, with each easily consumable section leading to the next.
  2. The content is advertiser-friendly.  Any web site that is ad-sponsored knows how important it is to create “context” and targeting for advertisers in order to add value and charge higher rates.   Shopping is one of those brilliant subject choices where advertising is content and vice-versa.  It is analogous to paid search online: because searchers are often looking for businesses, their click throughs and effective CPMs are far above internet average.  Moreover, People StyleWatch is open to creating pseudo-editorial sections with featured retailers (such as the recently announced JCPenney partnership).
  3. They offer exclusive discounts. Consumers love to get a deal, and coupon / discount web services (including the recently hyped group-coupon genre) are very popular with women online.   People StyleWatch goes beyond the celebrity watching and fashion trends to become part of their readers’ lives, changing the value proposition from just entertainment to a great way to get more for less.  In so doing, they are enhancing the reader’s experience.
  4. There is a clear call to action.  Most of the products include not only pricing information, but web sites, 800 numbers, and in some cases, text messaging options for buying information.   This is beneficial for both readers and advertisers.
  5. Content costs are low. Some of the most successful online properties such as Facebook, YouTube, and Yelp rely primarily on user-generated content.  Successful online publications like The Huffington Post regularly feature guest bloggers.    Traditional high-cost content is increasingly difficult to support profitably with advertising given the fragmentation of media consumption in recent years.  People StyleWatch features lower cost content, with research consisting of quick calls to publicists or product marketers, and images from paparazzi or retailers rather than expensive celebrity photo shoots.

This is more than just flexing editorial styles to meet the expectations of web-addicted younger readers.   The magazine is embracing a new business model with lower costs and more attractive content for advertisers that allows it to grow in an otherwise contracting space.  They are hitting on one of the key success factors for Publishing 2.0, namely an adaptive business model.  Time Inc. CEO Ann Moore, who has led the People brand for more than a decade in various roles, no doubt is taking notice.

Regardless of your personal opinions of the content, the results – in both readership and profitability – are hard to dispute.

Is $0.99 The Way To Change Consumer Behavior?

18 Mar
2010

by Ben Elowitz

At the 2010 Media Summit conference last week, Arthur Sulzberger and Janet Robinson talked more about their get-consumers-to-pay digital strategy.  While they didn’t reveal any major new details, they did expose a couple of wrinkles by implying that there will be more apps and value-adds that they will look to upsell consumers on.

When I asked them about training consumers to pay for content, Arthur Sulzberger initially brushed it aside saying their “loyalists” are willing to pay for their intensive usage.  I pressed further:  what about getting the mass market of consumer audiences – not just the heavy users – to start opening their wallets?  Sulzberger’s reply:  no new behaviors are required.

Sulzberger got it wrong:  getting consumers to habitually pay for content is certainly a change in behavior.  James McQuivey at Forrester recently looked back on decades of media models and called it:  “People don’t pay for content, and never have. They pay for access to content.”

But Arthur Sulzberger’s statement belied some of the actions that the New York Times is taking that are in synch with changing consumer behavior.  Early this week, Damon Kiesow at Poynter.org reported that the New York Times will be “disaggregating” their book review – in order to charge for it a la carte in appetizer-sized portions.

Which makes me wonder:  is bite-size the new way to get consumers to pay?

It has this going for it: between iPhone apps and iTunes songs, the bite-size purchase is absolutely the most successful model so far when it comes to changing consumer behavior en masse.  It’s easy, it’s fast, and it’s economical.  At about a buck, most importantly it’s stress-free and totally disposable.  It removes much of the barrier of consideration from software and media purchases that is present in other consumer-pay models.

Regardless of what its leaders are saying in public, it looks like the New York Times is betting on big changes to how people consume and pay for content: and that will come in packages big and small.

The NYT’s Metering Plan Doesn’t Go Far Enough—Here’s The Rest Of The Solution

4 Feb
2010

by Ben Elowitz

This post appeared as a guest post on PaidContent on February 4, 2010.

It’s now abundantly clear that the ad model isn’t enough to support the New York Times’ online future—the company needs consumers to help pay the bills. Thus, its recent decision to go metered. But the plan to charge some subscribers is not the end solution, it’s more like one piece of the puzzle. The company needs to take a few other big steps to help ensure the financial viability of NYTimes.com.

To be fair, let’s start with the three things the NYT got right with its decision, before we look at three things it still needs to do. You can see the upsides of the metering decision more clearly when you actually crunch the numbers on how the new system will impact existing revenues and look more deeply at the costs of implementing other types of subscriber plans.

1) Preserving advertising revenue. As a public company, the last thing the Times Company can afford to do now is shrink its existing online revenues.

A freemium model with a cap of, say, 20 articles per month lets the NYT retain up to 50 percent of its ad impressions (based on Quantcast data)—but most importantly, the company is preserving the most valuable impressions. (Light users are actually more valuable per pageview since they don’t exceed frequency caps.) By always allowing access to premium pages like the home page and section index pages, the most lucrative placements on the site will be served to every reader.

And by maintaining open access to casual users, NYTimes.com can preserve its eight-figure reach, which is critical to winning deals from top advertisers and commanding a high price premium. (Had they gone members-only, even with equivalent subscription numbers to the Wall Street Journal’s 400,000, the NYT’s rank would plunge to #2,000 as a web publisher—hardly enough reach to matter.)

Bottom line: With this approach, the NYT will likely retain 80 percent to 90 percent of current ad revenues.

2) Segmenting customers. Every marketer knows the way to maximize customer revenues is price discrimination, charging different (and the maximum tolerable) rates for each customer. Currently, the New York Times (NYSE: NYT) scores a zero here: Content is free for every user.

The ideal program charges each person exactly what he or she’d be willing to pay. A metered system isn’t perfect, but it’s far better than the TimesSelect model, which according to my analysis cost the NYTimes.com half of its online revenues while alienating readers who weren’t going to pay much, if anything, anyway.

In this way, the metering plan helps create a smart foundation: A configurable platform supporting dynamic offers that will tap those willing to pay more to get more.

3) Fine-tuning the advertising-revenue/subscription-revenue mix. A paywall that cuts off the existing online revenue stream—even just temporarily in order to build subscriptions—would mean nearly tripling the holding company’s $40 million annual operating loss (see Excel modelhere). Even if the NYT were outstanding at converting users, this public company can’t stomach the interim revenue hit. If the NYT converted 3 percent of its monthly audience (similar to WSJ ratio) over three years it would suffer a quarter-of-a-billion dollar cumulative loss—and still not be in the black.

By implementing a metering system that is flexible and tuneable, rather than a straight paywall, the NYT will be able to turn the dials as needed.  Quick test-and-iterate cycles will let them optimize the meter settings without jarring the advertising dollars they depend on. In a strict paywall, it would have to make the switch with its eyes closed and fingers crossed.

But these three accomplishments just aren’t enough. What the Times really needs to do is adopt a whole new architecture for its digital business. In particular, the goals should be to develop compelling new kinds of content, new experiences and new offers. These are the sorts of moves that will generate huge interest and huge premiums, and they result from discontinuous, not incremental, thinking.

How will we know when NYT has summoned the courage? We will be looking for these signs:

1) Acquisitions. What new products, business models, and accelerators can the Times add to its portfolio to create discontinuous innovation? Nothing says “strategic change” like M&A, and the NYT signaled its digital directive in 2005 by buying About.com for $410 million, shocking everyone at how deadly serious it was about building digital capability. Now it’s time to acquire sites like Associated Content or Mahalo to build a new, scalable sourcing model for additional non-premium content to supplement its top-tier journalism; or blog networks like Gawker to enter new vertical categories and gain experience with new labor models.

2) Product and content offering. The NYT is a premium media property. What new premium content and products can it offer to coax new consumer spending? While the NYT has explored many new ways to read and interact with the paper’s content, the desperate straits call for more dramatic action: reinventing the whole publishing model—lest otherpublishers and device manufacturers get there first. Each new and innovative experience is a chance to lead the revolution as well as a premium revenue opportunity.

3) Talent. The innovation needed at the Times is unlikely to come from inside its headquarters. What outside talent can it bring in to orchestrate major progress, beyond putting aninsider in charge of the new metered model?  Erik Jorgensen and Scott Moore helped MSN break out of its rut with a whole new home page that weaves social media into the content experience. Jimmy Pitaro at Yahoo (NSDQ: YHOO) is demonstrating that he can create bold new programmingfor users. And Bill Wilson at AOL (NYSE: AOL) has created over six-dozen content destinations—and a marketplace for content—in his MediaGlow unit. These are the types of break-the-status-quo thinkers that could help Martin Nisenholtz bring the Times to find a new way.

And one final thing. Speed.

The NYT’s approach to the radical change in its business is anything but radical. It’s careful, considered, and incremental, and it’s missing an essential ingredient: speed. Breakthrough change doesn’t happen slowly.

In this era of “launch and learn,” it is a big mistake to wait until January 2011 to launch the new approach, as the company has said it will. Sure, technology needs to be built to handle subscription database ties, but that development can and should be done fast. The goal should be to deploy the system in 90 days and then tune the dials on the fly, developing and testing multiple products and offers to increase user spend. Every month they wait, another 12,000 subscribers may flee the core print business (based on its recent six-month circulation decline).

In the end, the challenge for the New York Times is not about consumer-payment mechanisms. The real challenge is to build something so great that consumers fall in love—and their credit card will be the surest sign of their devotion.

The True Cost of TimesSelect

2 Feb
2010

by Ben Elowitz

As we’ve all read about, the New York Times’ TimesSelect experiment of 2005-2007 was spun as quite successful even as it was cancelled, while those of us in the industry had a strong sense that it flopped.

But just how much did it lose? No one seems to have put figures to it yet.

While the NYT lauded the $10MM in annual revenue that the program created, what they didn’t mention was the cost. Based on traffic rebounds of 65% once the TimesSelect program was cancelled, the TimesSelect program cost NYT one-third of its traffic and likely almost as high a fraction of the site’s revenue.

At today’s monetization rates of $75 RPM (imputed from their Q3 2009 financials) on the 62MM suppressed pageviews of their traffic at the time, that’s making $10 million at the cost of $56 million a year. (Or maybe even more than that, as ad rates have fallen since then. If anyone has then-current CPM estimates for NYTimes.com, please leave me a comment.)

Relative to today’s estimated $110MM topline for NYTimes.com online ad revenues, that is a hefty price to pay at 50% of revenues.

Clearly, that was a subscription program gone wrong.

The stakes are high. This time, it’s no wonder NYT will need to take care to optimize take rates and retain advertising revenues.

(The Excel model for these estimates is posted here for those who want to play with the assumptions – and if you have any suggestions please leave me a comment.)


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